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STREAMPLAY STUDIO LIMITED Interim / Quarterly Report 2015
65841_rns_2015-03-12_79581e54-2ae5-4bb8-95f1-b75a48ff73ed.pdf
Interim / Quarterly Report
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ABN 31 004 766 376 and Controlled Entities
FINANCIAL REPORT
FOR THE HALF-YEAR ENDED
31 DECEMBER 2014
CONTENTS
| CORPORATE DIRECTORY | 1 |
|---|---|
| DIRECTORS' REPORT | 3 |
| AUDITOR'S INDEPENDENCE DECLARATION | 5 |
| CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE HALF-YEAR ENDED 31 DECEMBER 2014 | 6 |
| CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAS AT 31 DECEMBER 2014 | 7 |
| CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE HALF-YEAR ENDED 31 DECEMBER 2014 | 8 |
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE HALF-YEAR ENDED 31 DECEMBER 2014 | 9 |
| NOTES TO THE FINANCIAL REPORTFOR THE HALF-YEAR ENDED 31 DECEMBER 2014 | 10 |
| DIRECTORS' DECLARATION | 19 |
| INDEPENDENT AUDITOR'S REVIEW REPORT TO THE MEMBERS OF GIPPSLAND LIMITED | 20 |
CORPORATE DIRECTORY
| DIRECTORS | Ian Jeffrey Gandel – Non-Executive ChairmanMichael Benjamin Rosenstreich – Managing DirectorJon Starink – Executive DirectorJohn Damian Kenny - Non-Executive Director | |||
|---|---|---|---|---|
| COMPANY SECRETARY | Rowan St John Caren | |||
| REGISTERED OFFICE | Suite 12, 186 Hay StreetSubiaco WA 6008Australia | |||
| POSTAL ADDRESS | PO Box 8206Subiaco WA 6008Australia | |||
| TELEPHONE | +61 (0)8 9340 6000 | |||
| FACSIMILE | +61 (0)8 9340 6060 | |||
| [email protected] | ||||
| WEBSITE | www.gippslandltd.com | |||
| AUDITORS | Deloitte Touche TohmatsuLevel 14, Woodside Plaza240 St Georges TerracePerth WA 6000Australia | |||
| SOLICITORS | Steinepreis PaganinLevel 4, 16 Milligan StreetPerth WA 6000Australia | Trowers & Hamlins3rd Floor, 1 El Gabalaya StreetZamalek, CairoArab Republic of Egypt | ||
| Gowlings (UK) LLP15th Floor, 125 Old Broad StreetLondon EC2N 1ARUnited Kingdom | ||||
| SHARE REGISTRY | Security Transfer Registrars Pty LtdSuite 1, 770 Canning HwyApplecross WA 6153Australia | PO Box 535Applecross WA 6953Australia |
Website: www.securitytransfer.com.au
CORPORATE DIRECTORY (cont)
| AUSTRALIAN SECURITIES EXCHANGE | The Company's securities are quoted on the official list of the AustralianSecurities Exchange (ASX Limited), the home exchange being:ASX Limited2 The EsplanadePerth WA 6000Australia |
|---|---|
| ASX CODE | GIP |
| FRANKFURT STOCK EXCHANGE | The Company's securities are quoted on the Frankfurt Stock Exchange;Neue Börsenstrasse 160487 Frankfurt / MainGermany |
| FSE – CODE | GIX |
DIRECTORS' REPORT
Your directors submit the financial report for the half-year ended 31 December 2014.
Directors
The names of directors who held office during or since the end of the half-year:
Mr Ian J Gandel Mr Michael B Rosenstreich Mr Jon Starink Mr John D Kenny
Review of Operations
The consolidated operating loss after tax for the half-year was $1,262,680 (2013 – loss of $3,042,989).
The principal activities of the economic entity during the half-year were the exploration and development of commercially and economically viable mineral resources. The Company continued to focus on the development of the Abu Dabbab Tantalum-Tin-Feldspar Project (the Project) which is owned by Tantalum Egypt JSC (TEJSC) in which both Gippsland and the Egyptian Government have a 50% shareholding.
During the period, the Company continued work on a Project development and financing strategy centred around a "lowcapital" development model utilising contractors and suppliers to undertake activities such as mining, crushing and screening the ore and supplying water, power and other services on a "through the fence" basis. The Company worked with two Dubai based groups to identify and engage with potential investors in Dubai, Abu Dhabi, Oman, Egypt and Saudi Arabia.
Late in the period the Company also devised a staged development strategy (the 400K Plan) based on the existing feasibility study testwork and equipment selection data, focussed around the existing gravity concentrator plant, site infrastructure and services from the alluvial tin operations. The 400K Plan involves a two stage development scenario with a total expenditure of US$35m (US$7m for stage 1 and US$28m for stage 2) culminating in annualised production of 400,000 lbs of Ta2O5, 960 t of tin metal and 1 Mt of ceramic grade feldspar.
Subsequent to the end of the period, the Company announced a conditional financing agreement for stage 1 of the 400K Plan had been signed with a Taiwan based company, Foxxtel Inc., associated with Egyptian businessman Mr Ashraf Henin. The US$7m financing agreement is conditional on completion of satisfactory due diligence and approval from the respective boards of each party, as well as other standard conditions precedent.
Operations at the alluvial tin project at Abu Dabbab ceased on 10 September, 2014. The alluvial project was vulnerable to several technical and productivity issues and Gippsland, with the full support of the TEJSC Board, decided to cease these operations. The alluvial tin operations site has been placed on care and maintenance whilst preparations are made for the commencement of the hard-rock project development.
In Eritrea, the areas of the Adobha Exploration Licence and Gerasi South Exploration Licence were reduced by 25% to a retained area of 792km2 and 75km2 respectively in compliance with the requirements of the renewal of the licences. Exploration remained at a minimum during the period as the Company's focus is currently on the Egyptian projects. Two parties are currently reviewing the exploration database for the Eritrean projects to assess their interest in forming an exploration joint venture.
Corporately, during the half-year:
-
- Gandel Metals Pty Ltd, a company related to the Company's Chairman, Mr Ian Gandel, provided further unsecured loans to the Company for $1,162,000, to bring the total loan balance to $3,734,000. The terms of the agreements are as follows:
- (a) the interest rate for the loans is equal to the ANZ loan interest rate, as varied (currently 5.33%);
- (b) the loans are unsecured;
(c) the loans are repayable by 30 April 2015 or following the completion of a capital raising by Gippsland for an amount equal to or greater than $500,000 more than the overall level of indebtedness to Gandel Metals at the time each loan agreement was entered into; and
(d) the most recent loan advance included above for $397,000 may be directly offset by monies payable by either Abbotsleigh Pty Limited (another entity associated with Mr Ian Gandel) or Gandel Metals for the subscription of shares under the Rights Issue.
- Gippsland commenced a non-renounceable rights issue (Rights Issue) on the basis of 5 shares for every 7 shares held at an issue price of $0.002 (0.2 cents) per share. The Rights Issue closed on 3 March 2015.
DIRECTORS' REPORT
Significant Events After the Balance Date
During February 2015, the Company entered into an agreement with Gandel Metals Pty Ltd, pursuant to which Gandel Metals has provided a loan facility to the Company in the amount of $155,000. At the date of this report, the $155,000 loan had been fully drawn down by Gippsland.
The terms of the agreements are as follows:
- (a) the interest rate for the loan is equal to the ANZ loan interest rate, as varied (currently 5.33%);
- (b) the loan is unsecured;
- (c) the loan is repayable by 30 April 2015 or following the completion of a capital raising of not less than $4.389 million; and
- (d) the loan may be directly offset by monies payable by either Abbotsleigh Pty Limited or Gandel Metals for the subscription of shares under the Rights Issue.
Also during February 2015, the Company entered into a deed of variation with Gandel Metals to extend the repayment date of existing loans totalling $3.734m until 30 April 2015.
On 26 February 2015, the Company announced it had signed a conditional financing agreement in relation to the Abu Dabbab Tantalum-Tin-Feldspar Project with a Taiwan based Company, Foxxtel Inc., associated with Egyptian businessman Mr Ashraf Henin. The US$7 million financing agreement is conditional on completion of satisfactory due diligence and approval from the respective boards of each party, as well as other standard conditions precedent.
During March 2015, $522,000 of the Gandel Metals loans were offset against the Rights Issue subscription for Abbotsleigh. After this offset, the balance of the Gandel Metals loans outstanding was $3,337,000.
During March 2015, the Company completed the Rights Issue which raised a total of $1,044,846 before issue costs and resulted in 522,422,785 shares being issued.
On 13 March 2015, Gandel Metals Pty Ltd provided a letter of extension to Gippsland in relation to the repayment terms of the existing loans totalling $3.337m advising that it is Gandel Metal's intention not to enforce the repayment date of 30 April 2015.
Since 31 December 2014, no other events have arisen that have materially affected the operations of the economic entity, the results of the economic entity or the state of affairs of the economic entity.
Auditor's Independence Declaration
The lead auditor's independence declaration under section 307C of the Corporations Act 2001 is set out on page 5 for the half-year ended 31 December 2014.
This report is signed in accordance with a resolution of the Board of Directors.
M ROSENSTREICH MANAGING DIRECTOR Dated this 13th day of March 2015
Deloitte Touche Tohmatsu ABN 74 490 121 060
Woodside Plaza Level 14 240 St Georges Terrace Perth WA 6000 GPO Box A46 Perth WA 6837 Australia
Tel: +61 8 9365 7000 Fax: +61 8 9365 7001
www.deloitte.com.au The Board of Directors Gippsland Limited Suite 12, 186 Hay Street SUBIACO WA 6008
13 March 2015
Dear Sirs
Gippsland Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Gippsland Limited.
As lead audit partner for the review of the financial statements of Gippsland Limited for the half-year ended 31 December 2014, I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
(ii) any applicable code of professional conduct in relation to the review.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
Neil Smith Partner Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2014
| Consolidated | |||
|---|---|---|---|
| Note | 31 December2014$ | 31 December2013$ | |
| Revenue | 70,030 | 1,542,500 | |
| Finance revenue | 4 | 926 | |
| Other income | - | 650 | |
| Total income | 70,034 | 1,544,076 | |
| Cost of sales | (183,398) | (2,069,379) | |
| Other gains and losses | (40,093) | - | |
| Administration expense | (368,511) | (758,713) | |
| Employee benefits expense | (580,165) | (574,694) | |
| Finance costs | (83,386) | (4,576) | |
| Foreign exchange (losses)/gains | (16,461) | (7,432) | |
| Depreciation expense | (26,425) | (43,015) | |
| Impairment of mine properties | - | (969,711) | |
| Impairment of exploration and evaluation expenditure | (34,275) | (159,545) | |
| Total expenses | (1,332,714) | (4,587,065) | |
| Loss before income tax | (1,262,680) | (3,042,989) | |
| Income tax expense | - | - | |
| Loss after income tax | (1,262,680) | (3,042,989) | |
| Other comprehensive income/(loss)Items that may be classified subsequently to profit or lossExchange differences on translation of foreign operations | 618,831 | 212,919 | |
| Total other comprehensive income/(loss) | 618,831 | 212,919 | |
| Total comprehensive income/(loss) for the period | (643,849) | (2,830,070) | |
| Profit/(loss) is attributable to: | |||
| Members of the parentNon-controlling interest | (1,979,777)717,097 | (2,369,893)(673,096) | |
| (1,262,680) | (3,042,989) | ||
| Total comprehensive income/(loss) is attributable to:Members of the parent | (812,824) | (2,048,302) | |
| Non-controlling interest | 168,975(643,849) | (781,768)(2,830,070) | |
| Earnings per shareBasic profit (loss) (cents per share)Diluted profit (loss) (cents per share) | (0.09)(0.09) | (0.22)(0.22) |
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2014
| Consolidated | ||||
|---|---|---|---|---|
| Note | 31 December2014$ | 30 June2014$ | ||
| CURRENT ASSETSCash and cash equivalentsTrade and other receivablesInventoriesOther assets | 175,03116,20384,05895,229 | 276,69826,68368,96746,346 | ||
| TOTAL CURRENT ASSETS | 370,521 | 418,694 | ||
| NON CURRENT ASSETSProperty, plant and equipmentExploration and evaluationMine properties | 6 | 914,0824,654,890- | 1,030,0533,833,035- | |
| TOTAL NON CURRENT ASSETS | 5,568,972 | 4,863,088 | ||
| TOTAL ASSETS | 5,939,493 | 5,281,782 | ||
| CURRENT LIABILITIESTrade and other payablesProvisionsLoans and borrowings | 4 | 1,668,830106,1583,734,016 | 1,521,041114,3872,572,016 | |
| TOTAL CURRENT LIABILITIES | 5,509,004 | 4,207,444 | ||
| TOTAL NON-CURRENT LIABILITIES | - | - | ||
| TOTAL LIABILITIES | 5,509,004 | 4,207,444 | ||
| NET ASSETS | 430,489 | 1,074,338 | ||
| EQUITYIssued capitalReservesAccumulated lossesNon-controlling interest | 3 | 48,530,322(522,453)(43,795,837)(3,781,543) | 48,530,322(1,689,406)(41,816,060)(3,950,518) | |
| TOTAL EQUITY | 430,489 | 1,074,338 |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2014
| Share Capital– Ordinary | AccumulatedLosses | OptionReserve | ForeignCurrencyTranslationReserve | NonControllingInterest | Total | |
|---|---|---|---|---|---|---|
| $ | $ | $ | $ | $ | $ | |
| Balance at 1 July 2013 | 48,530,322 | (37,964,388) | 534,662 | (1,792,583) | (2,166,628) | 7,141,385 |
| Currency translationdifferences | - | - | - | 321,591 | (108,672) | 212,919 |
| Loss for the period | - | (2,369,893) | - | - | (673,096) | (3,042,989) |
| Total comprehensiveincome/(loss) for the period | - | (2,369,893) | - | 321,591 | (781,768) | (2,830,070) |
| Transactions with ownersin their capacity asowners | ||||||
| Shares issued during thehalf-year | - | - | - | - | - | - |
| Share issue costs | - | - | - | - | - | - |
| Option reserve onrecognition of unlistedoptions | - | - | - | - | - | - |
| Balance at 31 December2013 | 48,530,322 | (40,334,281) | 534,662 | (1,470,992) | (2,948,396) | 4,311,315 |
| Balance at 1 July 2014 | 48,530,322 | (41,816,060) | 534,662 | (2,224,068) | (3,950,518) | 1,074,338 |
| Currency translation | - | - | - | 1,166,953 | (548,122) | 618,831 |
| differencesLoss for the period | - | (1,979,777) | - | - | 717,097 | (1,262,680) |
| Total comprehensiveincome/(loss) for the period | - | (1,979,777) | - | 1,166,953 | 168,975 | (643,849) |
| Transactions with ownersin their capacity asowners | ||||||
| Shares issued during thehalf-year | - | - | - | - | - | - |
| Share issue costsOption reserve on | - | - | - | - | - | - |
| recognition of unlistedoptions | - | - | - | - | - | - |
| Balance at 31 December2014 | 48,530,322 | (43,795,837) | 534,662 | (1,057,115) | (3,781,543) | 430,489 |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2014
| Consolidated | |||
|---|---|---|---|
| 31 December2014$ | 31 December2013$ | ||
| CASH FLOWS FROM OPERATINGACTIVITIES | |||
| Receipts from sale of alluvial tinPayments to suppliers and employeesInterest receivedFinance costs paidOther income | 53,324(1,101,840)4(72,038)- | 1,508,754(2,233,157)998(8,270)651 | |
| Net cash flows from/(used in) operatingactivities | (1,120,550) | (731,024) | |
| CASH FLOWS FROM INVESTING ACTIVITIES | |||
| Payments for exploration and evaluationPurchase of property, plant and equipmentProceeds from sale of plant and equipment | (237,423)(729)91,969 | (277,800)(37,238)- | |
| Net cash flows from/(used in) investing activities | (146,183) | (315,038) | |
| CASH FLOWS FROM FINANCINGACTIVITIES | |||
| Net proceeds from share issuesPayment of share issue costsProceeds from borrowingsRepayment of borrowings | -(20,824)1,184,236(2,944) | -(6,221)750,000- | |
| Net cash flows from/(used in) financing activities | 1,160,468 | 743,779 | |
| Net increase / (decrease) in cash and cashequivalents | (106,265) | (302,283) | |
| Effects of exchange rate changes on cash | 4,598 | 3,138 | |
| Cash and cash equivalents at beginning ofperiod | 276,698 | 586,883 | |
| Cash and cash equivalents at end of period | 175,031 | 287,738 |
NOTES TO THE FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014
NOTE 1: BASIS OF PREPARATION
The half-year consolidated financial statements are a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standard AASB 134: Interim Financial Reporting. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 Interim Financial Reporting.
The half-year financial report does not include all of the notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.
It is recommended that this financial report be read in conjunction with the annual financial report for the year ended 30 June 2014 and any public announcements made by Gippsland Limited and its controlled entities during the half-year in accordance with the continuous disclosure requirements arising under the Corporations Act 2001.
For the purpose of preparing the half-year financial report, the half-year has been treated as a discrete reporting period.
Reporting Basis and Conventions
The half-year report has been prepared on an accrual basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.
Going Concern
The financial report has been prepared on the going concern basis, which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.
The consolidated entity has incurred a net loss after income tax of $1,262,680 (2013: $3,042,989) and experienced net cash outflows from operations of $1,120,550 (2013: $731,024) and net cash outflows from investing activities of $146,183 (2013: $315,038) for the half year ended 31 December 2014. As at 31 December 2014, the consolidated entity had a working capital deficiency of $5,138,483 and had cash and cash equivalents of $175,031.
These conditions indicate a material uncertainty that may cast significant doubt about the consolidated entity's ability to continue as a going concern.
Subsequent to 31 December 2014, Gippsland entered into an agreement with Gandel Metals Pty Limited (a director related entity of Ian Gandel) to provide an additional $155,000 in short-term funding. Details of the terms of this loan have been disclosed in Note 8 to the financial report. To the date of this report, $155,000 of this funding has been drawn down.
In March 2015, the Company completed the non-renounceable Rights Issue which raised a total of $1,044,846 before issue costs. Of this amount $552,000 loan funds of Gandel Metals Pty Limited have been offset against the Rights Issue subscription by director related entity, Abbotsleigh Pty Limited.
The directors have prepared a cash flow forecast for the period ending 31 March 2016 which indicates that the current cash resources will not meet expected cash outgoings without additional capital and / or debt funding. The directors anticipate that these requirements will be met through the following:
- (i) Further to the closing of the Rights Issue as noted above, the Company has the ability to accept shortfall offers, of which $250k is expected to be placed by April 2015;
- (ii) Obtaining a continued deferral of loans outstanding from Gandel Metals Pty Ltd for at least 12 months from the date of signing the financial report;
- (iii) Completion of conditions precedent by May 2015, to allow progressive draw downs on the conditional financing agreement for the Abu Dabbab project to raise US$7m (refer to Note 8);
- (iv) Further capital raisings and / or debt funding to be raised progressively over the period with at least $1.2m in May 2015, with a further $1.8m in the second half of the calendar year;
- (v) The continual deferral of amounts currently due and payable to trade creditors and other payables, particularly in respect to the Egyptian operations; and
- (vi) Obtaining deferral on exploration commitments on its Eritrean project from the Eritrean Ministry of Energy and Mines for at least 12 months from signing the financial report.
Should the consolidated entity be unable to achieve the initiatives referred to above in the required timeframe, the consolidated entity will need to seek an extension of existing funding arrangements or obtain alternative funding arrangements. The directors are satisfied that they will achieve the matters set out above and therefore the going concern basis of preparation is appropriate.
NOTES TO THE FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014
Should the consolidated entity be unable to achieve the initiatives referred to above, there is a material uncertainty whether the consolidated entity will be able to continue as a going concern and, therefore, whether it will realise its assets and discharge its liabilities in the normal course of business.
The financial report does not include adjustments relating to the recoverability and classification of recorded asset amounts, or to the amounts and classification of liabilities that might be necessary should the consolidated entity not continue as a going concern.
Accounting Policies
The accounting policies have been consistently applied by the entities in the consolidated entity and are consistent with those applied in the 30 June 2014 annual report, except for the adoption of amending standards mandatory for annual periods beginning on or after 1 July 2014, as noted below. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.
New Standards and Interpretations
(a) Changes in Accounting Policies and Disclosures
The consolidated entity has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board that are relevant to their operations and are effective for the current financial reporting period.
Significant new and revised standards and interpretations effective for the current financial reporting period that are relevant to the consolidated entity are:
- AASB 1031 'Materiality' (2013)
- AASB 2012-3 'Amendments to Australian Accounting Standards Offsetting Financial Assets and Financial Liabilities'
- AASB 2013-9 'Amendments to Australian Accounting Standards' Part B: 'Materiality'
- AASB 2014-1 'Amendments to Australian Accounting Standards'
- o Part A: 'Annual Improvements 2010-2012 and 2011-2013 Cycles'
- o Part C: 'Materiality'
- Interpretation 21 'Levies'
Impact of the application of AASB 1031 'Materiality' (2013)
The revised AASB 1031 is an interim standard that cross-references to other Standards and the Framework for the Preparation and Presentation of Financial Statements (issued December 2013) that contain guidance on materiality. The AASB is progressively removing references to AASB 1031 in all Standards and Interpretations, and once all these references have been removed, AASB 1031 will be withdrawn. The adoption of AASB 1031 does not have any material impact on the disclosures or the amounts recognised in the Group's condensed consolidated financial statements.
Impact of the application of AASB 2012-3 'Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities'
The Group has applied the amendments to AASB 132 for the first time in the current year. The amendments to AASB 132 clarify the requirements relating to the offset of financial assets and financial liabilities. Specifically, the amendments clarify the meaning of 'currently has a legally enforceable right of set-off' and 'simultaneous realisation and settlement'.
The amendments have been applied retrospectively. As the Group does not have any financial assets and financial liabilities that qualify for offset, the application of the amendments has had no impact on the disclosures or on the amounts recognised in the Group's consolidated financial statements.
Impact of the application of AASB 2013-9 'Amendments to Australian Accounting Standards' – Part B: 'Materiality'
This amending standard makes amendments to particular Australian Accounting Standards to delete references to AASB 1031, at the same time it makes various editorial corrections to Australian Accounting Standards as well. The adoption of amending standard does not have any material impact on the disclosures or the amounts recognised in the Group's condensed consolidated financial statements.
NOTES TO THE FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014
Impact of the application of AASB 2014-1 'Amendments to Australian Accounting Standards' Part A: 'Annual Improvements 2010-2012 and 2011-2013 Cycle'
The Annual Improvements 2010-2012 Cycle include a number of amendments to various AASBs, which are summarised below.
The amendments to AASB 2 (i) change the definitions of 'vesting condition' and 'market condition'; and (ii) add definitions for 'performance condition' and 'service condition' which were previously included within the definition of 'vesting condition'. The amendments to AASB 2 are effective for share-based payment transactions for which the grant date is on or after 1 July 2014. The amendments to AASB 3 clarify that contingent consideration that is classified as an asset or a liability should be measured at fair value at each reporting date, irrespective of whether the contingent consideration is a financial instrument within the scope of AASB 9 or AASB 139 or a non-financial asset or liability. Changes in fair value (other than measurement period adjustments) should be recognised in profit and loss. The amendments to AASB 3 are effective for business combinations for which the acquisition date is on or after 1 July 2014.
The amendments to AASB 8 (i) require an entity to disclose the judgements made by management in applying the aggregation criteria to operating segments, including a description of the operating segments aggregated and the economic indicators assessed in determining whether the operating segments have 'similar economic characteristics'; and (ii) clarify that a reconciliation of the total of the reportable segments' assets to the entity's assets should only be provided if the segment assets are regularly provided to the chief operating decision-maker.
The amendments to the basis for conclusions of AASB 13 clarify that the issue of AASB 13 and consequential amendments to AASB 139 and AASB 9 did not remove the ability to measure short term receivables and payables with no stated interest rate at their invoice amounts without discounting, if the effect of discounting is immaterial. As the amendments do not contain any effective date, they are considered to be immediately effective.
The amendments to AASB 116 and AASB 138 remove perceived inconsistencies in the accounting for accumulated depreciation/amortisation when an item of property, plant and equipment or an intangible asset is revalued. The amended standards clarify that the gross carrying amount is adjusted in a manner consistent with the revaluation of the carrying amount of the asset and that accumulated depreciation/amortisation is the difference between the gross carrying amount and the carrying amount after taking into account accumulated impairment losses.
The amendments to AASB 124 clarify that a management entity providing key management personnel services to a reporting entity is a related party of the reporting entity. Consequently, the reporting entity should disclose as related party transactions the amounts incurred for the service paid or payable to the management entity for the provision of key management personnel services. However, disclosure of the components of such compensation is not required.
The 'Annual Improvements 2011-2013 Cycle' include a number of amendments to various AASBs, which are summarised below.
The amendments to AASB 3 clarify that the standard does not apply to the accounting for the formation of all types of joint arrangement in the financial statements of the joint arrangement itself.
The amendments to AASB 13 clarify that the scope of the portfolio exception for measuring the fair value of a group of financial assets and financial liabilities on a net basis includes all contracts that are within the scope of, and accounted for in accordance with, AASB 139 or AASB 9, even if those contracts do not meet the definitions of financial assets or financial liabilities within AASB 132.
The amendments to AASB 140 clarify that AASB 140 and AASB 3 are not mutually exclusive and application of both standards may be required. Consequently, an entity acquiring investment property must determine whether: (a) the property meets the definition of investment property in terms of AASB 140; and (b) the transaction meets the definition of a business combination under AASB 3.
Part C – 'Materiality'
This amending standard makes amendments to particular Australian Accounting Standards to delete their references to AASB 1031, which historically has been referenced in each Australian Accounting Standard. The adoption of amending standard does not have any material impact on the disclosures or the amounts recognised in the Group's condensed consolidated financial statements.
NOTES TO THE FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014
Impact of the application of Interpretation 21 'Levies'
The Group has applied Interpretation 21 'Levies*'* for the first time in the current year. Interpretation 21 addresses the issue as to when to recognise a liability to pay a levy imposed by a government. The Interpretation defines a levy, and specifies that the obligating event that gives rise to the liability is the activity that triggers the payment of the levy, as identified by legislation. The Interpretation provides guidance on how different levy arrangements should be accounted for, in particular, it clarifies that neither economic compulsion nor the going concern basis of financial statements preparation implies that an entity has a present obligation to pay a levy that will be triggered by operating in a future period.
Interpretation 21 has been applied retrospectively. The application of this Interpretation does not have any material impact on the disclosures or on the amounts recognised in the Group's condensed consolidated financial statements.
(b) Accounting Standards and Interpretations issued but not yet effective.
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective and have not been adopted by the consolidated entity for the half-year ending 31 December 2014. Management are in the process of assessing the impact of the adoption of these standards and interpretations on the consolidated entity.
NOTE 2: OPERATING SEGMENT
(a) Industry segments
The Group operates predominantly in the mining and exploration industry.
Information reported to the Group's chief operating decision maker for the purpose of resource allocation and assessment of segment performance is focussed on the type of resources being explored for and evaluated or developed. The Group's reportable segments under AASB 8 are therefore as follows:
- Tantalum
- Gold
- Copper
- Corporate
The tantalum segment relates to the development of the Group's Abu Dabbab tantalum-tin project in Egypt. The gold segment relates to the exploration activities at Wadi Allaqi in Egypt.
The copper segment relates to the exploration activities at the Adobha project in Eritrea.
The corporate segment relates to operations of the corporate head office in Perth, Western Australia.
NOTES TO THE FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014
(b) Business segments
The following tables present revenue and loss information and certain asset and liability information regarding business segments for the periods ended 31 December 2014 and 2013.
| Continuing Operations | Total | ||||
|---|---|---|---|---|---|
| Tin/Tantalum$ | Gold$ | Copper$ | Corporate$ | Operations$ | |
| Period ended 31 December 2014 | |||||
| Revenue | |||||
| Other revenues from external customers | 70,030 | - | - | 4 | 70,034 |
| Inter-segment transactions | - | - | - | - | - |
| Total segment revenue | 70,030 | - | - | 4 | 70,034 |
| Inter-segment elimination | - | ||||
| Total consolidated revenue | 70,034 | ||||
| Result | |||||
| Segment result | (523,650) | (40,495) | (42,619) | (655,916) | (1,262,680) |
| (Loss) before income tax and minorityinterest | (1,262,680) | ||||
| Income tax expense | - | ||||
| Net (loss) for the year | (1,262,680) | ||||
| Assets | |||||
| Segment assets | 5,658,065 | 13,069 | 104,729 | 163,630 | 5,939,493 |
| Total assets | 5,939,493 | ||||
| Continuing Operations | Total | ||||
| Tin/Tantalum | Gold | Copper | Corporate | Operations |
| $ | $ | $ | $ | $ | |
|---|---|---|---|---|---|
| Period ended 31 December 2013 | |||||
| Revenue | |||||
| Other revenues from external customers | 1,542,530 | 4 | - | 1,542 | 1,544,076 |
| Inter-segment transactions | - | - | - | - | - |
| Total segment revenue | 1,542,530 | 4 | - | 1,542 | 1,544,076 |
| Inter-segment elimination | - | ||||
| Total consolidated revenue | 1,544,076 | ||||
| Result | |||||
| Segment result | (2,106,074) | (27,500) | (216,279) | (693,136) | (3,042,989) |
| (Loss) before income tax and minority | |||||
| interest | (3,042,989) | ||||
| Income tax expense | - | ||||
| Net (loss) for the year | (3,042,989) | ||||
| Assets | |||||
| Segment assets | 6,828,566 | 35,535 | 182,575 | 107,389 | 7,154,065 |
| Total assets | 7,154,065 |
NOTES TO THE FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014
NOTE 3: CONTRIBUTED EQUITY
| 31 December2014$ | 31 December2014Number | 30 June2014$ | 30 June2014Number | |
|---|---|---|---|---|
| Issued capital: | ||||
| 1,375,700,081 (June 2014: | ||||
| 1,375,700,081) fully paid | ||||
| ordinary shares | 48,530,322 | 1,375,700,081 | 48,530,322 | 1,375,700,081 |
| MovementOpening Balance at 1 July 2014 | 48,530,322 | 1,375,700,081 | ||
| Shares issued during the period | - | - | ||
| Share issue costs | - | |||
| Closing balance at 31 December | ||||
| 2014 | 48,530,322 | 1,375,700,081 |
As at 31 December 2014 the economic entity had nil options on issue.
NOTE 4: LOANS AND BORROWINGS
| 31/12/2014$ | 30/6/2014$ | |
|---|---|---|
| Loans – unsecured (Gandel Metals) | 3,734,016 | 2,572,016 |
During the period, Gandel Metals Pty Ltd, a company related to the Company's Chairman, Mr Ian Gandel, provided further unsecured loan funding to the Company of $1,162,000, resulting in a total loan balance at the end of the period of $3,734,016. The terms of the Gandel Metals loan agreements are as follows:
- (a) the interest rate for the loans is equal to the ANZ loan interest rate, as varied (currently 5.33%);
- (b) the loans are unsecured;
- (c) the loan is repayable by 30 April 2015 or following the completion of a capital raising by Gippsland for an amount equal to or greater than $500,000 more than the overall level of indebtedness to Gandel Metals at the time each loan agreement was entered into; and
- (d) the most recent loan advance included above for $397,000 may be directly offset by monies payable by either Abbotsleigh Pty Limited (another entity associated with Mr Ian Gandel) or Gandel Metals for the subscription of shares under the Rights Issue.
During the half-year, interest paid or payable on the loans from Gandel Metals was $81,430 (2013: $7,342).
NOTE 5: COMMITMENTS AND CONTINGENCIES
Operating lease commitments - Group as lessee
The Group has entered into commercial leases for office accommodation in:
- Perth, Australia; and
- Cairo, Egypt.
Perth Office Lease
The property lease is a non-cancellable lease with a rolling 3 month term, with rent payable monthly in advance.
Cairo Office Lease
The property lease is a non-cancellable lease with a five year term expiring on 31 August 2016, with rent payable monthly in advance. Lease payments for the next 12 month period to 31 December 2015 are estimated to be $19,000 and for the remaining term of the current lease from 1 January 2016 to 31 August 2016 are estimated to be $13,000.
NOTES TO THE FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014
Bank Guarantee
A subsidiary of the Group has been required to provide a bank guarantee of US$30,000 to the General Authority for Investment and Free Zone in Egypt. The letter of guarantee is valid until 10 August 2015.
Minimum Exploration Expenditure – Eritrea
Under Eritrean mining law, expenditure commitments entered into by a tenement holder with respect to a tenement are mandatory. Failure to expend funds in accordance with a commitment may result in a liability to the Eritrean government to the extent of the unexpended portion of the expenditure commitment, or forfeiture of the tenement/s. The Group has received verbal advice from the Eritrean Ministry of Energy and Mines that the minimum expenditure commitments in relation to the exploration licences has been waived and there is no remaining liability in relation to the current or prior year's expenditure commitments. The Company has received written confirmation from the Eritrean Ministry of Energy and Mines that the applications to renew the Exploration Licences have been approved. The Adobha Exploration Licence has been extended until 20 July 2015 (year 5) and the Gerasi South Exploration Licence has been extended until 21 August 2015 (year 4). In compliance with the renewal requirements, 25% of the Gerasi South Exploration licence was relinquished resulting in a retained area of 75km2 and a further 25% of the Adobha Exploration Licence was relinquished resulting in a retained area of 792km2. Based on the exploration licence agreements, the minimum expenditure commitment for year 5 of the Adobha Exploration Licence is US$5,189,000 and the minimum expenditure commitment for year 4 of the Gerasi South Exploration Licence is US$600,000. The Company has no current plans to undertake significant expenditure in Eritrea and is in early discussions with several parties regarding potential joint venture arrangements. At this stage these discussions are very preliminary and there is no certainty that any form of exploration joint venture will be agreed. Therefore it is unlikely that expenditure commitments will be met and accordingly it is possible that the Company's projects may be subject to forfeiture. As referred to in the Going Concern note (Note 2(b)), the financial forecast of the Group is based on the deferral of exploration commitments on its Eritrean project from the Eritrean Ministry of Energy and Mines for a period of at least 12 months from the date of the signing of this financial report. As at 31 December 2014, the Eritrean exploration licences were fully impaired. The Group has pending applications regarding other exploration licence areas.
Exploration Expenditure - Nuweibi
Prior to 30 June 2011, the Group committed to spend US$300,000 on exploration at its Nuweibi Tantalum-Tin Project.
Drilling at Nuweibi was deferred due to the lack of a suitable drilling rig. Accordingly, approximately a further US$294,400 is required to be spent in relation to exploration once a suitable drilling rig becomes available in order to meet this expenditure commitment.
Capital Commitments
The Group did not have any capital commitments as at Balance Date.
Contingent Liability
The Group did not have any contingent liabilities as at Balance Date.
NOTE 6: MINE PROPERTIES
The Alluvial Tin Project ceased operations during September 2014 and, accordingly, the mine properties and their associated accumulated amortisation and impairment have been removed from the financial statements. Capitalised costs in relation to the project had been fully amortised and impaired.
| 31/12/2014 | 30/6/2014 | |
|---|---|---|
| $ | $ | |
| Mine properties (at cost) | - | 1,750,059 |
| Accumulated amortisation and impairment | - | (1,750,059) |
| - | - |
NOTES TO THE FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014
Movement:
| - | 1,573,476 |
|---|---|
| - | 111,260 |
| - | 30,396 |
| - | (745,421) |
| - | (969,711) |
| - | - |
NOTE 7: FINANCIAL INSTRUMENTS
Fair Values
Set out below is a comparison by category of carrying amounts and fair values of all of the Group's financial instruments recognised in the financial statements:
| Carrying Amount | Fair Value | |||
|---|---|---|---|---|
| 31/12/2014 | 30/6/2014 | 31/12/2014 | 30/6/2014 | |
| $ | $ | $ | $ | |
| Financial Assets | ||||
| Cash | 175,031 | 276,698 | 175,031 | 276,698 |
| Trade and other receivables - current | 16,203 | 26,683 | 16,203 | 26,683 |
| Financial Liabilities | ||||
| Trade and other payables | 1,649,774 | 1,521,041 | 1,649,774 | 1,521,041 |
| Unsecured loans | 3,753,072 | 2,572,016 | 3,753,072 | 2,572,016 |
Cash, cash equivalents and security deposits: The carrying amount approximates fair value because of their short term to maturity
Trade receivables and trade creditors: The carrying amount approximates fair value.
Shares in controlled entities are excluded from the above as these are accounted for at cost in accordance with AASB 127.
NOTE 8: EVENTS SUBSEQUENT TO REPORTING DATE
During February 2015, the Company entered into an agreement with Gandel Metals Pty Ltd, pursuant to which Gandel Metals has provided a loan facility to the Company in the amount of $155,000. At the date of this report, the $155,000 loan had been fully drawn down by Gippsland.
The terms of the agreements are as follows:
- (a) the interest rate for the loan is equal to the ANZ loan interest rate, as varied (currently 5.33%);
- (b) the loan is unsecured;
- (c) the loan is repayable by 30 April 2015 or following the completion of a capital raising of not less than $4.389 million; and
- (d) the loan may be directly offset by monies payable by either Abbotsleigh Pty Limited or Gandel Metals for the subscription of shares under the Rights Issue.
Also during February 2015, the Company entered into a deed of variation with Gandel Metals to extend the repayment date of existing loans totalling $3.734m until 30 April 2015.
NOTES TO THE FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014
On 26 February 2015, the Company announced it had signed a conditional financing agreement in relation to the Abu Dabbab Tantalum-Tin-Feldspar Project with a Taiwan based Company, Foxxtel Inc., associated with Egyptian businessman Mr Ashraf Henin. The US$7 million financing agreement is conditional on completion of satisfactory due diligence and approval from the respective boards of each party, as well as other standard conditions precedent.
During March 2015, $522,000 of the Gandel Metals loans were offset against the Rights Issue subscription for Abbotsleigh. After this offset, the balance of the Gandel Metals loans outstanding was $3,337,000.
During March 2015, the Company completed the Rights Issue which raised a total of $1,044,846 before issue costs and resulted in 522,422,785 shares being issued.
On 13 March 2015, Gandel Metals Pty Ltd provided a letter of extension to Gippsland in relation to the repayment terms of the existing loans totalling $3.337m advising that it is Gandel Metal's intention not to enforce the repayment date of 30 April 2015.
Since 31 December 2014, no other events have arisen that have materially affected the operations of the economic entity, the results of the economic entity or the state of affairs of the economic entity.
DIRECTORS' DECLARATION
The directors of Gippsland Limited declare that:
-
- In the directors' opinion, the financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the consolidated entity's financial position as at 31 December 2014 and of its performance for the half-year ended on that date; and
-
- In the directors' opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors dated this 13th day of March 2015.
M ROSENSTREICH Managing Director
Deloitte Touche Tohmatsu ABN 74 490 121 060
Woodside Plaza Level 14 240 St Georges Terrace Perth WA 6000 GPO Box A46 Perth WA 6837 Australia
Tel: +61 8 9365 7000 Fax: +61 8 9365 7001 www.deloitte.com.au
Independent Auditor's Review Report to the Members of Gippsland Limited
We have reviewed the accompanying half-year financial report of Gippsland Limited, which comprises the condensed consolidated statement of financial position as at 31 December 2014, and the condensed consolidated statement of profit or loss and other comprehensive income, the condensed consolidated statement of cash flows and the condensed consolidated statement of changes in equity for the half-year ended on that date, selected explanatory notes and, the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the end of the half-year or from time to time during the half-year as set out on pages 6 to 19.
Directors' Responsibility for the Half-Year Financial Report
The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity's financial position as at 31 December 2014 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Gippsland Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.
A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Auditor's Independence Declaration
In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Gippsland Limited, would be in the same terms if given to the directors as at the time of this auditor's review report.
Conclusion
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Gippsland Limited is not in accordance with the Corporations Act 2001, including:
- (a) giving a true and fair view of the consolidated entity's financial position as at 31 December 2014 and of its performance for the half-year ended on that date; and
- (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.
Material Uncertainty Regarding Continuation as a Going Concern
Without modifying our conclusion, we draw attention to Note 1 in the financial report which indicates that the consolidated entity has incurred net losses of $1,262,680 (2013: $3,042,989) and experienced net cash outflows from operations of $1,120,550 (2013: $731,024) and net cash outflows from investing activities of $146,183 (2013: $315,038) for the half-year ended 31 December 2014. These conditions, along with other matters set out in Note 1, indicate the existence of a material uncertainty that may cast significant doubt about the consolidated entity's ability to continue as a going concern and therefore, whether it will realise its assets and extinguish its liabilities in the ordinary course of business.
DELOITTE TOUCHE TOHMATSU
Neil Smith Partner Chartered Accountants Perth, 13 March 2015